Russia Flaunts Startup Might at Roadshow

Getting to 'да'. Photo: Wired

“We are only company in world that can protect you from Russian hackers,” says Alexander Chachava.

The company is Cybercop, and according to Chachava, its security software fortifies banks and other large enterprises against hackers from other countries, too, but the emphasis is on Russia, a country increasingly known not only for its underworld hackers but for its burgeoning software industry.

Cybercop was just one of 13 Russian outfits flaunting their technologies at the Skolkovo Road Show in Menlo Park, California this week. Chachava was joined by the likes of Agent Plus and iBuildApp, which offer platforms for building business apps on iOS and Android, and Evanti LTD, an outfit that claims its unique Game Theory algorithm will help businesses juggle large amounts of video bandwidth.

“The goal here is to see how Russian ideas fit into the world,” said Alexander Turkot, executive director of the Skolkovo IT Cluster. Think of it as TechCrunch Disrupt for the Eastern European set.

Turkot’s organization ferrets out Russian Internet and IT software startup darlings and introduces them to the world at large — most notably through this show in Silicon Valley. Giants such as Microsoft, Cisco, and Google have signed marketing partnerships with Skolkovo, but the real goal of the tour is to get in front of the VCs. Like other quick-fire venture roundups, each Russian team was given five minutes to make their pitch, before taking questions from the audience.

FilmLanguage, a software package released less than a year ago by Bazelevs Innovation, induced a respectful hush in the room. Simply typing “John swerves through city traffic and hits a lamp post” into its text engine can return an animation of John doing just that. The program pulls from a preset object database and uses speech analytic tools to generate the video. The company has already talked to Hollywood and social media outfits about potential applications to bolster online user engagement.

“We want to expand to the US,” Sergei Kuzmin, the FilmLanguage’s head of business development, told Wired. “Money is valuable, of course. But more important to us is a board of advisers.”

Many of the companies at Skolkovo were already flush with cash courtesy of grants — not loans — from the Russian government. Last summer, Russian President Dmitry Medvedev toured companies such as Twitter and Cisco and met with then Google CEO Eric Schmidt for ideas on how to recreate a bustling technology center outside Moscow. In an attempt to diversify the economy — i.e. shift it away from oil and gas — the Kremlin has been generous with the money thrown towards software engineers and entrepreneurs, usually only requiring that some level of development remain in Russia.

But such “handouts” raise an important question: How will these young companies, that have built their products largely on free money, react if Silicon Valley invests and installs a more discerning board?

“I do think they’ll be some transitional issues,” notes Bill Reichert of Garage Technology Ventures. “They’ll have to shift from that old investment model to the new.”

Reichert played a key role on this side of the Pacific pond in bringing Skolkovo to the States. He likens this new Russian movement to what Israeli software companies did in the late 90s. Those that have a strong engineering team and core product will establish independent Delaware subsidiaries to alleviate concerns about a somewhat unpredictable foreign government reigning over an investment, warm up to American capital and advisers, and grow.

On Wednesday, growing pains were evident in the pitches themselves. At other lighting-pitch investment conferences, entrepreneurs typically “show off” a product, rather than simply saying what it does. But it didn’t quite work this way at Skolkovo, which may be a reflection of the homeland. Only two groups actually demoed their product. The rest of the presentations were simple — often rushed — PowerPoint slides. One could sense that “selling” isn’t a prime focus of the software culture.

Questions were usually answered with measured, almost cold logic, rather than the sort of flourish you get from American entrepreneurs. Perhaps cutting the fluff is a better way of doing things — but the investment community is used to the flourish. Investors look for management teams that will instill confidence in future employees, additional investors, and, yes, the media.

“Most of the feedback is about marketing,” said Konstantin Zaslavsky, of contextual search engine Choister. But his business partner Alexei Nizovskikh added that the language barrier makes things rather difficult. The Soviet Union, he said, in a reminder of a Cold War past, had greatly discouraged using English. Many Russians, now in their 30s and 40s, would have had to fight against a heavy social tide to learn the language at a young age, and thus speak it fluidly. Even an accent or a pause when searching for the right vocabulary can throw off the presentation, he said.

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